Insurance industry groups including the Property Casualty Insurers Association of America have applauded new legislation that means the Federal Reserve can apply different capital standards to insurers compared with those applied to banks.
A bipartisan group of lawmakers in the US Senate and House of Representatives including Senator Susan Collins introduced legislation this week that instructs the Federal Reserve to take state insurance capital standards into account when crafting rules for insurance groups that fall under its supervision.
The legislation, which has long been lobbied for by the industry, amends Section 171 of the Dodd-Frank Act and makes it clear that the Fed does not have to apply bank capital standards to insurers. Instead, the Fed can take into account differences between banks and insurers when implementing capital standards.
The Property Casualty Insurers Association of America said the legislation recognises the fundamental differences between insurance and bank business models and acknowledges that a one-size-fits-all model for regulation won't work.
North America, Federal Reserve, Property Casualty Insurers Association of America